Tuesday, February 09, 2010

Local govt response to audit query not satisfying - PAC

Local govt response to audit query not satisfying - PAC
By Mwala Kalaluka
Tue 09 Feb. 2010, 08:00 CAT

THE Parliamentary Public Accounts Committee (PAC) yesterday expressed dissatisfaction with the Ministry of Local Government and Housing’s responses over audit queries highlighted concerning the Western Water and Sewerage Company (WWSC) operations for the year 2007.

During a submission before PAC, acting local government permanent secretary Timothy Hakuyu agreed with all the queries highlighted by the Auditor General in relation to operations at the water utility company.

Hakuyu, who was accompanied by WWSC managing director Justin Liyali and Ministry of Local Government and Housing director of housing and infrastructure services Peter Lubambo, said the utility company had operational difficulties.
On the query relating to the non-constitution of a board, Hakuyu said as correctly observed by the auditors, the board was dissolved in 2006 as part of the re-organisation of the company.

Hakuyu said a board had since been put in place despite setbacks.
“It is true that the company did not have financial statements from the year 2000 to 2007,” Hakuyu said. “There were a few setbacks in the operations of the company including the lack of staffing levels.”

He said the new board was in the process of recruiting a finance director and that a pastel accounting package had been procured to help in managing the utility’s accounts.

“We are looking at getting a financial consultant,” Hakuyu said.

Hakuyu said WWSC could not value its fixed assets in the six districts of the province as most of these had been under the ownership of the various local authorities before they came under the company.

He said the Ministry of Local Government and Housing was in the process of undertaking the valuation of field assets field exercise.

“We believe the report will be ready very soon,” Hakuyu said.

Hakuyu agreed that the company did not honour most of its statutory obligations to a tune of about K1.1 billion but this was due to the poor financial position and heavy indebtedness.

“The company is still faced with these problems to date,” he said. “The Western Water and Sewerage Company has been making huge losses from inception to date. The current board management is committed to reducing this indebtedness in anyway possible.”

But PAC chairperson Emmanuel Hachipuka curtailed Hakuyu’s submission on grounds that the latter had not addressed himself to the concerns raised in the audit report during his submission.

“Your colleagues there are not helping you. They have given you a story that does not answer the concerns of the Auditor General,” he said. “We want to understand why you permitted this company to operate the board from inception… The committee wants to know why the Ministry of Local Government is violating statutes. You as PS you should explain why your ministry has allowed this situation?”

Hachipuka wondered why the ministry had tolerated WWSC to operate without preparing financial statements for a period of over seven years without any reprimand.

“The company Act says you are supposed to be filing returns every year,” he said. “How can you be recruiting a director of finance while at the same time you procure Pastel accounting system. So who is the owner of that Pastel accounting system?”
Hachipuka said on that basis he was not sure whether the committee should proceed with the submission.

“You have not answered the audit queries,” he said. “Why would you think that the answers you have given to the committee are adequate?”

Hachipuka asked Hakuyu and his delegation to excuse the committee for a while to allow them hold internal consultations on how to proceed.

After the short break, Nchelenge member of parliament Ben Mwila said the committee had difficulties with the responses to the audit queries.

Mwila said it was clear that the ministry was not supervising the water utility company and urged Hakuyu to enhance that relationship.

Hachipuka then asked the government, management and the company board to furnish PAC with a well thought out and not flimsy plan to take out the company from its present predicament.

“Your share capital of K2 million is totally inadequate,” Hachipuka said. “You will not be able to pump water with a share capital of two million.”
Hakuyu said the problems at WWSC cut across all the water utility companies.

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